UK Food Drink Industry Marketing Topic

United Kingdom UK Food and Drink Industry - Marketing Dissertation Writing Help

Industry Forecast of Food and Drink Industry in UK

Global Industry Overview

The first quarter of 2013 was largely a good one for the global food and drink industry. Improving sentiment across parts of the developed world, particularly the United States, as well as in crucial growth markets such as China, contributed to a promising run-up in the share prices of many of the world's leading food and drink companies. 

The highlight of the quarter was undoubtedly the announcement in February 2013 that Warren Buffett and his Berkshire Hathaway investment fund had teamed up with Brazil-based private equity firm 3G Capital to strike a US$28bn deal to buy US food company Heinz. Once the regulatory hurdles are cleared, the deal is likely to be the fourth largest food and drink acquisition of all time. 

The quarter's events continued to reinforce the Food & Drink team's core near- and long-term views. One of the most widely discussed issues has been food safety, with concerns about horsemeat in the European supply chain, high levels of antibiotics in meat supplied to fast-food restaurant KFC in China, and possibly poor-quality infant formula supplied to the Chinese market all having a marked effect on spending. The run-up in commodity prices on the back of the US's worst drought in about 50 years was among the most important themes seen over the second half of 2012; however, the prices of key grains have stabilised since Q412. That said, they remain historically quite elevated.

Consumer Outlook

Although we expect a positive full-year out-turn - with a 1.1% real GDP growth forecast currently penciled in - we warn that recovery is both fragile and patchy with considerable headwinds in the form of severe demand destruction in the periphery of the eurozone, which could clobber UK trade and investment. The economy is recovering, but with fiscal cuts looming and unemployment stubbornly high, the rate of growth will be fairly tepid.

Beyond this year, we expect a further pickup in activity to underpin a 1.4% growth rate in 2014 and 2.0% in 2015. Combined household deleveraging and the government's ambitious fiscal squeeze have left the export sector and fixed capital investment as the only viable engines of growth.

The key factor for the UK economy is the health of the UK consumer, which contributes three-quarters of national spending. Therefore, we believe that the state of household deleveraging will provide significant clues as to the magnitude and direction of economic growth going forward. Households have been net borrowers for the best part of a decade. However, mortgagors have been able to rely on rapid growth in property prices during the last economic cycle, which have increased equity values and made it relatively easy to service loans. With property prices now falling and interest costs still exceeding nominal income growth, households have been forced to save more.

Credit data certainly reflect the constraints facing the household sector. Spending is further affected by the deleveraging pressure facing the household sector, with extremely low interest rates and general economic uncertainty motivating many borrowers to pay down mortgages. Housing equity withdrawal, which had surged during the credit boom as borrowers funded spending by releasing equity, remains deeply negative as households focus on paying off debts.

Although we believe that high leverage in the banking sector does not necessarily present an imminent risk, we are concerned with the anaemic pace of deleveraging among households, which are the driving force of the economy. With nominal income growth unlikely to pick up substantially and household indebtedness still high, the Bank of England will be unable to raise interest rates for many years to come. In the meantime consumer spending, and by extension economic growth, will continue to suffer.

More Positive Over Longer Term

 We hold a more upbeat outlook over the longer term and expect private consumption growth to outperform the eurozone out to 2017. The UK is supported by the competitive nature of its economy, with independent monetary and exchange rate policies and an early commitment to major fiscal reforms. We believe this fiscal commitment puts the country in a stronger position to benefit from an upturn in growth than some of its other European neighbours such as France and Germany. Additionally, the UK consumer is one of the most enthusiastic in Western Europe, and the food and drink industry stands to benefit more strongly than others from the eventual rebound in regional growth.

Risks To Outlook

There are significant downside risks to our economic growth forecasts, particularly stemming from the impact of fiscal consolidation and the eurozone sovereign debt crisis.

If you want Dissertation Writing Help or Research Proposal on UK Food and Drink Industry, contact  http://www.mahasagarpublications.com or Call +91 9819650213 or +91 8081344446 or use the contact form given below.